ADA asks Congress to provide fair and equal treatment for dental practices in House tax bill

November 08, 2017

By Jennifer Garvin

Washington — As Congress works to finalize tax reform legislation, the ADA is requesting the tax treatment of S Corporations in the current House bill be extended to all dental practices which are organized as pass-through entities or S Corporations.

In Nov. 8 letters to the Senate Finance Committee and House Ways and Means Committee, the ADA urged legislators to "reconsider a business tax issue that impacts our members."

S corporations pass corporate income, losses, deductions and credits through to their shareholders for federal tax purposes, according to the Internal Revenue Service. This enables shareholders to be taxed at their individual income tax rates and to avoid double taxation on the corporate income.

The provision in the current House bill that is intended to provide relief for S Corporations does not apply to entities designated as personal services, such as dental offices.
"Because of this distinction, the ADA is concerned that affected dental practices are not receiving fair and equal treatment of their business income," wrote ADA President Joseph P. Crowley and Executive Director Kathleen T. O'Loughlin, noting that most dental offices are small businesses and as many as 53 percent of those practices are structured or organized as pass-through entities or S Corporations.

"The dental industry in the United States is both a revenue producer and job creator," Drs. Crowley and O'Loughlin wrote. "One dental office contributes an estimated $1.7 million dollars annually to the economy. The industry overall contributes to numerous sectors, from trade and manufacturing, to real estate and utilities.

"In any given year, it is estimated that the dental industry has an economic impact of $272 billion," they concluded, citing research from the ADA Health Policy Institute. "Our dental office S Corporations are key 'main street' businesses and should be treated as such under any proposal to revise S Corporation tax rates."